Monday, 27 Jun 2016 12:37 GMT

Looking at Retirement Options

Roger Aust of Close Brothers Asset Finance looks at retirement options for business owners

Can selling be the perfect retirement plan?

Planning for retirement can be difficult, particularly for small business owners; however, the challenges retirement presents do not need to be insurmountable.

According to recent figures, retirement is one of the most common reasons given for wanting to sell, and it is estimated that each year more than 80,000 businesses with turnover of less than £10m and owners aged over 60, wind up their solvent business when they could have sold it on to a new owner or to existing staff as a going concern.

For the business owner, there are many options that can be explored on retirement, including:

Selling the business
Running a viable business can be demanding when attempting to find a buyer. Around 80 percent of businesses never attempt to sell, missing out on receiving any kind of capital payment.
Hiring a new MD
A business will always be more attractive to a potential buyer if it is not 100 percent reliant on the owner, but this can be prohibitively expensive and impact the retirement fund. Finding a candidate that is the right fit for the business is challenging and can have unintended consequences.
Succession planning
This is a crucial ingredient in maximising the capital gain from the potential sale of the business. It is essential that potential buyers can see longevity and are not deterred by the loss of key people through retirement.

Even if the above ingredients are all in place, any potential sale, buy-in, or management buyout will need funding; asset finance can unlock equity and funds that will assist in the sale.

How can asset finance and Close Brothers help with retirement? 

Asset finance is not only useful when buying new equipment or helping at the start-up stage—the example below helps to illustrate its flexibility.

A family firm with no natural successor has equity in their assets and in their debtor book, a robust order book, and a strong corporate identity, all of which can be used to raise the funds that they need to live on. Either the owner or prospective buyer can approach Close Brothers to discharge equity from the unencumbered assets through products such as Sale and HP Back, thereby releasing funds which the owner can use as an income stream in retirement, while the new owner takes over the business with a Hire Purchase agreement on the existing assets.

The owner can also sell the corporate identity and order book to a new buyer, thus raising the required amount (for the owner) to release their lifetime’s work from the business. This is also an excellent option to consider when proposing to take over a business; buy it out, or incorporate it into an existing business.
Close Brothers has been working with small businesses in the print industry since the 1980s. Our business was founded on funding Heidelberg printers, and we have always been consistent in our funding approach, making money available throughout all of the economic cycles.

We were one of the few companies that continued to lend during recessions, including the early 90s and 2010, when solid businesses’ cash flow dried up. Our understanding of our industry and the sector we work in allows us to be confident in business owners and the value of the assets they utilise.

We were one of the few companies that continued to lend during recessions

Things to consider before you sell

Ensure your business is in the best position to attract a buyer, including:

  • Reduce long-term debt
  • Put in place a viable succession plan
  • Obtain a realistic valuation of your assets and your order book
  • Research potential buyers
  • Understand what you need for your retirement

Like many business owners, you may also own a factory, producing an income stream. This will provide continuity for customers, employees, and the new owners alike. Our job is to be there for every eventuality, including retirement.

To find out more about the issues discussed in this article you can contact Close Brothers Asset Finance on 020 80030744 or visit

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